Fair Housing and Ethical Practices LEARNING OBJECTIVES: Describe the purpose of the fair housing laws and regulations and their impact on the practices of real estate licensees. Identify and describe the various federal laws, including the Civil Rights Act of 1866, the Fair Housing Act and other federal initiatives and supreme court cases that address housing discrimination. Describe the protected classes and acts that are prohibited under federal law and your state's laws. Discuss how families with children and people with handicaps are affected by recent changes in the laws. Describe the exemptions to the Fair Housing Act. Discuss affirmative actions including the use of the equal housing opportunity poster. Identify and describe the Equal Credit Opportunity Act. Discuss the Americans with Disabilities Act. Discuss how blockbusting, steering, and redlining affect licensees and the difference between intent and effect. Explain how the fair housing laws affect appraising and advertising practices. Describe the enforcement procedures of the federal and state laws. Explain the difference between legal and ethical practices and how the industry seeks ethical behavior from its practitioners.

Fair Housing and Ethical Practices LECTURE OUTLINE: I.Equal Opportunity in Housing A. All real estate licensees must be aware of federal, state and local fair housing laws. B. Purpose of the laws is to create an open, unbiased housing market in which every person has the opportunity to live where he or she chooses within his or her ability to pay. C. Failure to comply with the laws is not only a criminal act but may also be grounds for disciplinary action against a licensee. D. State and local laws may be more restrictive than federal law. E. Civil Rights Act of 1866prohibits discrimination in housing based on race, without exception Court 1896 decision, Plessy V Ferguson F. "Separate but equal" doctrine created classes among citizens because separate was rarely equal.

Fair Housing and Ethical Practices LECTURE OUTLINE: II.Fair Housing Act (Title VII of the Civil Rights Act of 1968)prohibits discrimination in housing; amended by the Housing and Community Development Act of 1974 and the Fair Housing Amendments Act 1988 (See Figure 20.1) A. Protected classes 1. race 2. color 3. religion 4. sex 5. handicap 6. familial status 7. national origin 8. including people who are associated with these individuals B. Equal Housing Opportunity Poster (See Figure 20.2) 1. Refusing to sell, rent or negotiate the sale or rental of housing 2. Making a dwelling unavailable to any person 3. Changing terms, conditions or services for different individuals as a means of discrimination 4. advertising that restricts the sale or rental of residential property

Fair Housing and Ethical Practices LECTURE OUTLINE: 5. Representing that a properties not available for sale or rent when in fact it is. 6. Profiting by inducing owners of housing to sell or rent because of the prospective entry into the neighborhood of persons in the protected classes 7. Altering the terms or conditions of a home loan or denying a loan as a means of discrimination 8. Denying membership or participation in any multiple listing service, real estate organization or other facility related to the sale or rental of housing as a means of discrimination C. Definitions 1. Housing—”dwelling: any building or part of a building designed for occupancy by one or more families. 2. Familial status-one or more individuals who have not reached the age of 18 being domiciled with a parent, guardian or other person with legal custody a. All properties available; under the same terms and conditions as for others b. Cannot use advertising or occupancy standards with the intent or effect of restricting families with children

Fair Housing and Ethical Practices LECTURE OUTLINE: 3. Disability—physical or mental impairment (or having a history of same) that substantially limits one or more major life activities a. Does not include current illegal use of or addition to a controlled substance b. Does protect individuals in addiction recovery programs c. Must provide accommodations and allow reasonable modifications that are necessary at tenants own expense d. See federal and state laws for accessibility guidelines. D. Exemptions to the Fair Housing Act The sale or rental of a single-family residence when the home is owned by an individual who does not own more than three such homes at one time and a real estate broker and discriminatory advertising is not used. The rental of rooms or units in an owner-occupied one- to four-family dwelling. Dwelling units owned by religious organizations may be restricted to people of the same religion if membership in the organization is not restricted t individuals in the protected classes. A private club that is not open to the public may restrict the rental or occupancy of the lodgings that it owns to its members as long as the lodgings are not operated commercially.

Fair Housing and Ethical Practices LECTURE OUTLINE: 1. Housing for older persons is exempt from the familial status protection. a. Must be occupied solely by persons at least 62 years old or: b. At least 80 percent of the units must be available for occupancy by at least one person at least 55 years of age and certain facilities for the elderly are provided 2. Jones v. Mayer (based on the Civil Rights Act of 1866)where race is involved, no exceptions apply a. Supreme Court interpretation expanded definition of race to include characteristics common to nationality groups. b. Affords due process of law for complaints. D. Equal Credit Opportunity Act (ECOA)-prohibits discrimination in the granting of credit based on race, color, religion, national origin, sex, marital status or age (if the applicant is of legal age) E. Americans with Disabilities Act-provides for nondiscriminatory employment procedures and accessibility to goods and services by people with disabilities 1. Title I-employment of qualified job applicants regardless of disability 2. Title III-accessibility to goods and services; barrier free

Fair Housing and Ethical Practices LECTURE OUTLINE: III. Fair Housing Practices A. Blockbusting-inducing homeowners to sell by making representations regarding the entry or prospective entry of into the neighborhood by people in the protected classes B. Steering-channeling home-seekers into or out of particular areas on the basis of race, color, religion, national origin or other protected class; the effect of limiting choices C. Advertising-language that indicates a preference or limitation is discriminatory, such as 1. cannot attract one population to exclusion of others. 2. selection of media D. Appraising-cannot consider factors related to the protected classes when preparing valuations or appraisals E. Redlining-refusing to make mortgage loans or issue insurance policies in specific areas without regard to the economic qualifications of the applicant F. Intent and effect-without intention to discriminate, certain activities can have that effect; disparate impact.

Fair Housing and Ethical Practices LECTURE OUTLINE: IV. Enforcement of the Fair Housing Act A. Administered by the Office of Fair Housing and Equal Opportunity (OFHEO) under the direction of the Secretary of HUD. 1. A complainant has one year after the alleged act of discrimination to file a charge with HUD or two years to bring a federal suit. 2. HUD will investigate to see if discrimination actually occurred. HUD will attempt to resolve by reconciliation 3. Unless someone connected with the charge requests that it be heard in federal district court, an administrative law judge from HUD will hear the charge. 4. The administrative law judge has the authority to issue an injunction, award actual damages and impose civil penalties of a. Up to $10,000 for first offense b. Up to $25,000 for second offense within 5 years c. Up to $50,000 for further violations in 7 years 5. Cases heard in federal court can result in the award of actual and unlimited punitive damages.

Fair Housing and Ethical Practices LECTURE OUTLINE: 6. Complaints brought under Civil Rights Act of 1866 taken directly to federal court B. State and local enforcement agencies 1. Many states and municipalities have own fair housing laws. 2. All complaints filed with HUD referred to local enforcement agencies if their laws are substantially equivalent with federal law. C. Threats or acts of violence-the Fair Housing Act protects those who seek or encourage the exercise of open housing rights.

Fair Housing and Ethical Practices LECTURE OUTLINE: V. Implications for Brokers and Salespeople A. Real estate industry largely responsible for creating and maintaining open housing market. 1. Social as well as legal responsibility 2. Reputation of industry cannot afford even the appearance of illegal discrimination. B. Good business practices will minimize the potential for charges of discrimination. 1. Office policies and procedures to avoid discrimination 2. Standardized inventory 3. Consistent practices 4. Verifiable and measurable criteria for property seekers 5. Written documentation of all aspects of a transaction 6. "Are we doing this for everyone?" 7. The broker should display the equal housing opportunity poster. VI. Americans with Disabilities Act A. Not a housing law B. Affects place of business/public access C. Define “disability”

Fair Housing and Ethical Practices LECTURE OUTLINE: VII. Professional Ethics A. Professional conduct involves more than compliance with the laws. 1. State license laws establish activities that are legal. 2. Ethics is a system of moral principles, rules and standards of conduct. B. Codes of ethics are written systems of standards for ethical conductspecific in dictating rules that either prohibit or demand certain behavior; must provide sanctions for violators. 1. Example-Code of Ethics of the National Association of REALTORS for its membership. 2. Some states require real estate commissions to establish code or canon of ethical behavior.